All Forum Posts by: Chris Eidson

@Chris C.

That's my dilemma.  The current street and adjacent streets are about 65% rental as best I can tell and the owner occupied homes show a decent level of pride of ownership, but there are no rehabbed comps on the street that have hit the market yet.  There are a couple of tear down/new constructions on the market now for the high 300's @ 150/sf.  They are about 2 miles away, but same school district.  There is one under contract that was purchased for 20k and listed at 119,900, but it is on the other side of the freeway about 1 mile as the crow flies. It is the exact same price/sf I anticipate after rehab, but it is larger.  I should have 66k in it when I'm finished.  

@Chris C.

That's a really tricky question.  This is on the edge of a up and coming market that has seen pretty strong appreciation and revitalization.  There is new construction in the upper 300s within 1.5 miles. (tear down and rebuild).  No difference in school districts.  I think I will have about 66k all in on this rehab.  As best I can tell, it's about 65% rentals on the street and there is some pride of ownership in the owner occupied homes, but there are a couple of badly distressed properties as well.  One rehab that the seller paid 20k is now under contract with a listing price of 119,900, but it is almost 800 sf larger.  Sq foot price is right in line with this prop at 66k.  I feel like there is room for appreciation, but I may be a little early.  I don't see this as any possibility of a flip, but some appreciation coming in a year or two.

@Marcus Auerbach @Aaron Stuiber

Thanks.  There are recent sales to investors and there are rehab projects going on right now.  Nothing on the street has hit the market.  Just considering this neighborhood because I'm trying to get a jump on the area.  I am not planning on flipping, but always want to have an exit strategy.

How do you evaluate a neighborhood for purchasing a property for rental income?

Let's say your looking at rehabbing a home to turn into a rental. The neighborhood is very mixed: long term owner occupied homes, a few abandoned/dilapidated homes, and several homes that have been rehabbed for rentals. I have a good handle on the cash flow because of rental income projections, but I don't have many good comps to determine ARV, because the recent sales are pre-rehab.

@Bill B. @Dave Foster

Thanks for your input.  I didn't realize there would be a proration.  Initially, from following the thread, I was under the impression that both my wife and I could take advantage of sec. 121, because we owned these properties individually prior to our marriage.  

Not much savings if I can't take advantage of sec. 121.  I do realize a 1031 is an option, but I was looking for a little more flexibility in my reinvestment options.

Wondering if this will work?

I have a similar situation. I wanted to avoid cap gain on 2 houses.  So here's my plan:

1. Sell her house this year and avoid cap gain with exclusion on sale of primary residence.

2. Move into my house in 2020, live there long enough to get 2 of prior 5 years, then sell my home and use my exclusion.

Here are the pertinent facts:

1. I purchased my home and lived in it for 22 months.  Then rented it.  (will be 2 years when my tenants leave February 2020.

2. I remarried in 2018 and moved into my wife's home

3. She has owned her home for 7 years with about 150K gain based on current market.

4. My home has about 50k gain as of now.

5. She is the sole owner of her home and I am sold owner of my home.

@Theresa Harris

It is definitely cheaper to rent than own when you consider all of the hidden costs.  I'm just thinking that the equity would go much farther with investments.

@Dennis M

I appreciate you sharing your thoughts.

This is not a home that has an emotional attachment.  I was really just wondering what the business case for it would be.

In light of the new tax law, fewer and fewer will be itemizing.  Therefore, the traditional tax breaks for the primary residence are a moot point (i.e. property taxes, mortgage interest, etc.).

It makes me think that I should consider selling my primary residence, especially since the appreciation has been great over the last few years and simply rent.  Using the equity to purchase investment properties and/or do flips.

What do you think?

@Derek Sperzel

Thanks for sharing.  I was not considering the importance, because I had replaced all of the major expenses with the rehab.  I appreciate the advice.